Japan stock market week to August 27, 2007

Tokyo continued a downturn in the two weeks to August 27. The Nikkei 225 ended down 3.0% to close at the 16,300 level, while the Topix index dropped 2.7%. The market suffered the steepest single-day loss in seven years on August 17, with the Nikkei falling to the lowest mark since August 7, 2006, due to continued worries about the US subprime market crisis and the yen's upsurge. The market recovered somewhat later in the week, after the US Federal Reserve Bank cut the discount rate 0.5% to 5.75% to calm the nation's economy. However, the basic tone is weak because of concerns about global credit market conditions given that the US subprime problem has not been completely solved yet. The pharmaceutical index was off 2.2%, slightly outperforming the market.

Tanabe gained 1.6%, aided by a media report that the company is to strengthen R&D of a new mechanism anti-diabetes drugs following the scheduled integration with Mitsubishi Pharma in October . Tanabe has TA-6666, depeptidyl peptidase inhibitor anti-diabetes drug which is in Phase II clinical trial in the USA and Phase I in Japan. Mitsubishi has MP-513, another DPP inhibitor, at Phase II in Japan. The new combined company is to select one best compound of this class later on. Tanabe's SGLT 2 inhibitor, which restrains SGLT 2, a protein related to glucose transport, is in a Phase I clinical trial in the USA by the licensee Johnson & Johnson. The Phase I clinical trial in Japan is to commence sometime this year.

Takeda edged up 0.3%, even though the US Food and Drug Administration asked the firm - and UK drug major GlaxoSmithKline - to add stronger warnings on the risk of heart failure for their thiazolidinedione-class anti-diabetes drugs, namely Takeda's Actos (pioglitazone) and GSK's Avandia (rosiglitazone; Marketletter August 20). The information is to be shown in the form of a black-box warning. The FDA is addressing the concern that, despite the warning information already listed in the product labels, these drugs are still prescribed without careful monitoring of signs of heart failure. Takeda, however, continues to believe that Actos has a stronger cardiovascular safety profile being supported by the favorable outcome of PROactive Study which proved that Actos can prevent a risk of macrovascular events in type 2 diabetes patients. Takeda's share performance was also assisted by its announcement jointly with Santhera Pharmaceuticals of Switzerland that the European Medicines Agency (EMEA) has accepted the filing of a Marketing Authorization Application of SNT-MC17 (idebenon), originated by Takeda, for the treatment of Friendreich's Ataxia (see page 23). The drug will be marketed in Europe by Takeda.